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Cheap Swills

Claim:   Charles Shaw wine is being sold cheaply because airlines can no longer use corkscrews and have therefore dumped their stocks of wine.

FALSE

Origins:   We tend to equate quality with cost, so the appearance of an underpriced wine of surprising virtue is bound to spark its share of interesting backstories. We view wine as a luxury item, and since we reject the intellectual construct that such an item can be both good and inexpensive, we instead seize upon plausible-sounding (but apocryphal) tales to explain the disparity between cheapness and quality. Good wine must be expensive, and if a good wine is being vended at a bargain price, there must be a calamitous reason for this fortuity. From this springboard are born rumor of airlines dumping their Merlot, and the like.

As the Los Angeles Times noted in a recent article about the burgeoning sales of Charles Shaw label wines:
The morning after a friend served Anna McNeal a glass of Charles Shaw Merlot, she made a beeline to the Mid-Wilshire Trader Joe's to stock up on the wine selling at an astonishing $1.99 a bottle. "I had to come and get a case," she said in a checkout line with half a dozen other shoppers who had somehow heard of the mysterious "Napa" wine.

Since it was introduced in February, Charles Shaw wine has gained a cult-like following in Southern California, with wine drinkers backing their cars up to the loading dock of the Los Angeles-based discounter to lay in a supply of the Trader Joe's exclusive.

"It's selling like crazy," said Jon Fredrikson, a wine consultant based in San Mateo County. "A great story for consumers."
Why is such a popular wine (Charles Shaw is one of the top 20 brands in the USA) being sold so cheaply? As usual, consumers have collectively created several inventive urban legend-like explanations for this seemingly inexplicable phenomenon:
  • Security regulations enacted after the September 11 terrorist attacks prohibit the carrying or use of corkscrews on commercial flights, so several airlines dumped their large stocks of wine on the market, thereby depressing prices.
  • Financially-distressed United Airlines attempted to raise some quick cash by selling their food service stocks, including an ample supply of Charles Shaw wine.
  • Charles Shaw himself, engaged in a bitter divorce struggle, attempted to reduce the value of his winery's assets by flooding the market with cheap wine.
Also Wine as usual, the real explanation why Charles Shaw wine (as well as other brands) can be had so cheaply right now is a mundane one: we're experiencing a wine glut. The wine boom of the 1990s led vineyards to increase production, but a downturn in the U.S. economy and the effects of September 11 have resulted in a greatly lessened demand (particularly in the restaurant industry), creating such an oversupply that many wines are now selling for less than the cost of production. Some vintners in northern California are even allowing their grapes to wither on the vine because the cost of picking them exceeds their market value.

The Charles Shaw label (known in local slang as "Two-Buck Chuck") has likely been the focus of the "cheap wine" rumors because it bears a prestigious Napa label, even though it sells for less than $2 per bottle. The catch is that it's almost certainly made with cheaper grapes from California's Central Valley rather than more desirable grapes from the Napa Valley, but because the label's parent company does own a winery and bottling facility in Napa, they're allowed to put "Napa" on the Charles Shaw label (which only indicates that the wine is "bottled and cellared" in Napa) even if the grapes used in the wine actually come from some other part of California:
[W]ine industry experts say that despite the classy Napa label, there probably isn't a hint of those pricey grapes in a bottle of Charles Shaw Melot, Chardonnay or Cabernet Sauvignon.

Even with the depressed market, grapes from Napa sell for around $2,000 a ton, said Brian Sudano of Beverage Marketing Corp. To make money on a $2 bottle, he added, a vintner would have to buy grapes for around $200 a ton — the price of less desirable Central Valley grapes.

This summer the market price for those grapes hit a low of $60 a ton. Swimming in excess wine, [Bronco Wine Co. head] Franzia revived the Charles Shaw label, believing it would be more cost-effective to dump his wine on the consumer market than to pour it on the ground. Taking advantage of the depressed wine grape market, he also bought up excess stock from other Central Valley vintners, according to several wine industry sources.

"Franzia was able to take advantage of distress sales by other vineyards, said [wine consultant Jon] Fredrikson. "And he's got the high-speed production lines to do it and still make money."
But what about this mysterious "Charles Shaw"? Was he a real person?

Indeed he was. Shaw, a Stanford Business School graduate, bought a Napa winery with
his wife, Lucy, in 1974 and began to produce Charles Shaw Beaujolais. However, after the Shaws divorced in 1991, they sold the winery. The Charles Shaw label possessed a good reputation, though, and Bronco Wine Co., a mass-market wine conglomerate (currently the eighth biggest wine producer in California) located in the Central Valley's Stanislaus County, bought it up and revived it in 2002 for sales of a line of inexpensive wines through the Trader Joe's chain of grocery stores.

The Bronco Wine Co. produces a variety of low-cost wines, and its president, Fred Franzia, has earned the enmity of plenty of other Wine Country citizens. Franzia was forced to step down as Bronco's president for five years after Bronco was fined $3 million in 1993 for misidentifying grape varietals on their labels, and other Napa vintners have long been disputing Bronco's use of "Napa" in the names of wines (such as their "Napa Ridge" variety) made from grapes grown elsewhere. But so far the courts have sided with Bronco, and for now the wine industry's turmoil is the wine consumer's good fortune.

Additional information:
    Charles Shaw   Charles Shaw
  (Interbrand)
Last updated:   11 May 2011

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Sources:

    Brown, Corie.   "The Truth in This Wine Is Elusive, But It Sells and Sells."
    Los Angeles Times.   7 December 2002.

    Brown, Corie.   "Hard Times at the Winery? Not for Everyone."
    Los Angeles Times.   26 February 2003   (p. F1).

    Emert, Carol.   "Wine Drinkers Gaga Over 'Two-Buck Chuck'."
    San Francisco Chronicle.   26 December 2002.

    Moran, Tim.   "$1.99 Wine Is Hottest Deal in Dodge."
    The Modesto Bee.   25 December 2002.